Risk management overhaul necessary for cities to become more resilient to catastrophic events: report

Officials for cities, investors and insurers will increasingly need to “build resilience within and between infrastructure systems as a complementary approach to address infrastructure risk and uncertainty,” argues a new report from Lloyd’s and Arup.

“While risk management remains a priority for cities, it is not enough on its own, or on an asset-by-asset basis,” concludes Future Cities: Building Infrastructure Resilience, released Friday by specialist insurance and reinsurance market Lloyd’s and global engineering consulting firm Arup.

The research analyzes four different critical infrastructure systems – energy, water supply, information communications technology, and transport – through three case studies, demonstrating the impact of catastrophic events on infrastructure in the past and how stakeholders responded at the time.

In order to better manage risk and recover quickly from future disasters, infrastructure owners and operators may need to move beyond asset-by-asset risk management to build resilience within, and between, infrastructure systems

Lloyd’s and Arup espouse a new approach that focuses on preventing failure, expediting recovery and transforming performance.

Meant to help municipal officials and insurers improve infrastructure resilience, the report details three new pathways to help guide planning, design, construction and operation of core city infrastructure. Specifically, the approaches are as follows:

prevent failure: make city infrastructure more resilient to shocks so that even if parts of it fail temporarily, the overall system still works;

expedite recovery: examine ways in which infrastructure can be restarted as quickly as possible post-disaster to save lives and prevent further failures; and

transform performance: replace the damaged infrastructure with a more resilient version as part of the rebuilding process.

“The rising costs of disasters is a growing concern for the public sector and the insurance industry alike; direct losses from disasters in the past decade are estimated at US$1.4 trillion,” notes the report.

Citing figures from the Lloyd’s City Risk Index, which found $4.6 trillion of the projected gross domestic product of 301 of the world’s leading cities is at risk from 18 threats over the next decade, the report adds that “clearly, cities will need to mitigate these risks if they are to realize their growth aims, but this is a complex task.”